2/18/2010 @ 11:55AM

WellCare Forecast Sickens Investors

In the final quarter of 2009, the Tampa-based insurer earned $11.1 million, or 26 cents per share, up from a loss of $31.1 million, or 70 cents per share in the year ago period. Excluding one-time items,
WellCare
earned 47 cents per share, down from 66 cents per share in the final quarter of 2008. Sales for the fourth-quarter hit $1.6 billion, up 1.6% year-over-year.

Though WellCare beat the 44-cent-per-share estimate of analysts polled by Thomson Reuters, analysts and investors were disappointed with the companys worse-than-expected 2010 guidance.

For the full year of 2010, WellCare said it expects to earn between $1.90 and $2.15 per share, less than half the consensus forecast of $4.56.

2010 guidance is well below our expectations as well as the Street consensus, says Barclays analyst Joshua Raskin. While we were anticipating the potential for conservatism in the outlook, we believe that the magnitude of the difference between expectations and the new guidance is too large to ignore.

Investors felt the same, sending shares of WellCare down 13.6%, or $4.37, to $27.76 Thursday morning.

Raskin also noted that WellCares fourth quarter results included higher-than-expected investigation costs stemming from previously disclosed government investigations into Medicaid fraud. He expected the charges would take a $7.3 million, or 14 cents per share, bite out of fourth-quarter earnings, but the company reported investigation-related charges of $11.8 million, or 21 cents per share.

WellCare also said its fourth quarter results were hindered by an 8% membership drop in 2009. The company, which reaps most of its enrollment from Medicaid, blamed its adjusted profit decline on Medicaid premium rate changes, as well as the introduction of its aged, blind and disabled program in Hawaii.